October 5, 2022 Newsletter

Dear Friends,

Tangents:

On this day in 1993, Daimler-Benz became the first German company to be listed on the New York Stock Exchange.

On October 5, 1947, in the first televised White House address, President Truman asked Americans to refrain from eating meat on Tuesdays and poultry on Thursdays to help stockpile grain for starving people in Europe.  Go to article »

Earth may be hiding an ocean.

The world’s best bars for 2022 have been revealed.  Move over London. Step aside New York. There’s a new cosmopolitan cocktail capital.

PHOTOS OF THE DAY

Racehorse Alligator Blood is seen during a recovery session at Altona Beach, before races this weekend
Photograph: Vince Caligiuri/Getty Images

A new immersive space exhibition called Science Fiction: Voyage into the Unknown opens at the Science Museum
Photograph: Graeme Robertson/The Guardian

A man walks up the steep steps at the Diamond Hill cemetery during the Chung Yeung festival, where relatives clean the graves of loved ones and leave offerings and flowers
Photograph: Miguel Candela/Anadolu Agency/Getty Images
Market Closes for October 5, 2022

International Markets

Bonds

Currencies

Commodities

Market Commentary:
Canada
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell 0.7% at 19,235.09 in Toronto.
The move follows the previous session’s increase of 2.6%.
Nutrien Ltd. contributed the most to the index decline, decreasing 3.9%. Labrador Iron Ore Royalty Corp. had the largest drop, falling 6.6%.
Today, 165 of 236 shares fell, while 67 rose; 9 of 11 sectors were lower, led by financials stocks.
Insights
* This year, the index fell 9.4%, heading for the worst year since 2018
* The index declined 4.7% in the past 52 weeks. The MSCI AC Americas Index lost 14% in the same period
* The S&P/TSX Composite is 13.4% below its 52-week high on April 5, 2022 and 5.9% above its low on July 14, 2022
* The S&P/TSX Composite is up 3.1% in the past 5 days and was little changed in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 13 on a trailing basis and 11.9 times estimated earnings of its members for the coming year * The index’s dividend yield is 3.2% on a trailing 12-month basis
* S&P/TSX Composite’s members have a total market capitalization of C$3.08t
* 30-day price volatility rose to 21.13% compared with 21.07% in the previous session and the average of 16.12% over the past month
================================================================
| Index Points | |
Sector Name | Move | % Change | Adv/Dec
================================================================
Financials | -48.9120| -0.8| 4/25
Materials | -30.1634| -1.3| 12/38
Industrials | -22.3817| -0.9| 6/20
Utilities | -17.8901| -1.9| 0/16
Information Technology | -16.4418| -1.6| 5/9
Communication Services | -13.0216| -1.4| 1/6
Real Estate | -7.8992| -1.6| 1/21
Consumer Staples | -5.8969| -0.8| 2/9
Health Care | -0.8301| -1.0| 1/5
Consumer Discretionary | 0.3977| 0.1| 7/7
Energy | 27.1492| 0.8| 28/9
================================================================
| | |Volume VS| YTD
|Index Points| | 20D AVG | Change
Top Contributors | Move |% Change | (%) | (%)
================================================================
Nutrien | -17.3300| -3.9| -30.4| 20.4
Constellation Software | -10.3500| -3.8| -21.7| -17.0
Brookfield Asset Management | -8.0650| -1.4| -30.0| -22.7
Canadian Natural Resources | 6.8090| 1.2| -30.4| 39.9
Suncor Energy | 8.9340| 2.2| -31.7| 39.7
Cenovus Energy | 10.4400| 4.7| 20.0| 58.0
US
By Rita Nazareth
(Bloomberg) — For many stock traders, it felt just about right that the market would take a breather after the dramatic rally of the past couple of days.
After a bounce that started around noon in New York and was attributed to a big options trade, the S&P 500 came back lower again.
For a market plagued by fears about a recession and the Federal Reserve’s struggles to tame high inflation, the rebound from this year’s bottom has maybe gone too far, too fast.
Fundamentally speaking, nothing has changed that much to make the US central bank tilt toward a more moderate bias to prevent a hard landing.
In fact, what Wall Street got on Wednesday was a renewal of the unflinching resolve from Fed officials to crush inflation.
Fed Bank of Atlanta President Raphael Bostic said he favors lifting rates to between 4% and 4.5% by the end of this year, and then keeping the tightening in place.
He also echoed comments from his San Francisco counterpart Mary Daly, who downplayed speculation about rate cuts in 2023.
To Win Thin at Brown Brothers Harriman, the notion of any Fed pivot is just “wishful thinking” as Fed officials remain hawkish.
He says another 75-basis-point hike next month is a “done deal.”
“Over the last few sessions, the market was too quick price in the ‘peak rate’ story in markets,” said Bipan Rai, head of North America currency strategy at CIBC.
“Price pressures are set to remain sticky for some time and while the Fed might be closer to smaller incremental hikes than not, playing this via a ‘peak rate’ view is fairly dicey.”
Matt Maley at Miller Tabak, the extreme positive breadth of the recent rebound in stocks is likely something that tells us the rally will take a “breather” for a day or two, but it might not mean that the bounce is over.
“Yes, ‘bear-market rallies’ can see sharp advances that reverse almost immediately, so what we’ve seen over the last two days could be the ultimate head fake,” Maley added. “However, if the stock market can digest its gains of the last two days without a major reversal over the next few days, it’s likely that we’ll see a bit more upside follow-through to this week’s bounce before long.”
All eyes will now be on the government’s payrolls report Friday that’s forecast to show another month of robust job creation and the unemployment rate holding near a 50-year low.
To Charlie McElligot at Nomura Securities, Wednesday’s ADP employment print helped mitigate some of that “dovish vibe” that followed data showing a slide in US job openings, which lent credibility to the idea that the labor market could be moderating.
As the Fed intensifies its inflation fight, a report released Wednesday illustrated the abrupt swing in borrowing costs.
US mortgage rates jumped to a 16-year high of 6.75%, marking the seventh-straight weekly increase and spurring the worst slump in home loan applications since the depths of the pandemic.
If history is any guide, “markets will need to experience more stress” before a pivot in monetary policy and an equity bottom, Wells Fargo & Co. strategists led by Christopher Harvey wrote.
The Cboe Volatility Index is still trading below 40 – a threshold that in the past signaled a shift to monetary easing.
US stocks just posted a rare streak of quarterly declines and are in a bear market, but Citigroup Inc. quantitative strategists say they’re only just starting to reflect the risks of a recession.
A team led by Hong Li said equities could come under further pressure as they continue to be “heavily driven” by heightened bond market volatility as well as concerns around persistent inflation and hawkish Fed.
There’s “more downside risk for the market and the earnings season,” they wrote.
Retail investors, who helped push stocks to all-time highs, are now trying a different tactic: Betting against the market.
From January to August this year, even before the most recent slump in stocks, the number of newly opened short positions on trading platform eToro was 61% higher than in 2021 and 41% higher than in 2020.
Meanwhile, some of the biggest US exchange-traded funds that bet against popular indexes are raking in record amounts of cash.
Investors’ uncertainty toward the health of US companies is rising — and their leaders haven’t done much to help.
The lack of an accurate road map for the crucial earnings season is setting the stage for a slew of potential surprises when the reporting season kicks off in coming weeks.
Aside from those few providing cold, hard numbers, executives at the 1,000 largest US firms have spent the past three months voicing a similar message in their public remarks:
They’re unsure about what’s ahead. They’ve mentioned “uncertainty” or its synonyms when describing the outlook 484 times during that time, the highest tally since the quarter ending March 2021, data compiled by Bloomberg show.
BofA Strategist Says US Stock Rally Has Set Off a Bullish Signal
Key events this week:
* Eurozone retail sales, Thursday
* US initial jobless claims, Thursday
* Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
* US unemployment, wholesale inventories, nonfarm payrolls, Friday
* BOE Deputy Governor Dave Ramsden speaks at event, Friday
* Fed’s John Williams speaks at event, Friday

Some of the main moves in markets:
Stocks
* The S&P 500 fell 0.2% as of 4 p.m. New York time
* The Nasdaq 100 was little changed
* The Dow Jones Industrial Average fell 0.1%
* The MSCI World index fell 0.1%
Currencies
* The Bloomberg Dollar Spot Index rose 0.6%
* The euro fell 1% to $0.9884
* The British pound fell 1.3% to $1.1327
* The Japanese yen fell 0.3% to 144.56 per dollar
Cryptocurrencies
* Bitcoin fell 1% to $20,130.68
* Ether fell 0.8% to $1,350.92
Bonds
* The yield on 10-year Treasuries advanced 11 basis points to 3.75%
* Germany’s 10-year yield advanced 16 basis points to 2.03%
* Britain’s 10-year yield advanced 16 basis points to 4.04%
Commodities
* West Texas Intermediate crude rose 1.6% to $87.87 a barrel
* Gold futures fell 0.3% to $1,725.30 an ounce
–With assistance from Peyton Forte, Vildana Hajric, Isabelle Lee, Emily Graffeo and Farah Elbahrawy.

Have a lovely evening.

Be magnificent!

As always,

Carolann

In the realm of ideas everything depends on enthusiasm.  In the real world,
all rests on perseverance. -Johann Wolfgang von Goethe, 1749-1832.

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Senior Investment Advisor

Queensbury Securities Inc.,
St. Andrew’s Square,
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7

Tel: 778.430.5808
(C): 250.881.0801
Toll Free: 1.877.430.5895
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www.carolannsteinhoff.com